Hello.
There are generally two viewpoints on this.
One side argues that profit is not more important than people. People
who take this position assert that corporate leaders should put
people-oriented values (e.g., community welfare, worker happiness,
environmental cleanliness, etc.) ahead of profits.
One proponent of this viewpoint is John Ikerd of University of
Missouri. Ikerd states:
"The economy of the future must focus on people rather than production
and profits. To achieve such an economy, we must challenge the
economic assumption that people are best served by ever-increasing
production and profits. Economists argue that since people invariable
prefer more money to less, more money obviously enhances our quality
of life. Thus the more we produce, spend, and consume the higher will
be our quality of life...
We need a society in which people recognize their interdependence,
understand that they are all part of the same whole, and truly care
about each other. More jobs and more money simply don’t translate
into acceptance of social responsibility. Our social responsibilities
will be met through understanding and compassion, not through the
pursuit of greed."
"Economics as if People Mattered; Farming for Quality of Life" by John
Ikerd, hosted by University of Missouri:
http://www.ssu.missouri.edu/faculty/jikerd/papers/EconasifPeopleMatter.htm
For more on the "people are more important than profits" viewpoint,
see the following articles:
"Firms should put people over profits" from The Daily Star:
http://www.thedailystar.com/opinion/columns/sam/2001/sam1208.html
"Distributism: Economics as if People Mattered", hosted by
Lifeissues.net
http://www.lifeissues.net/writers/cho/cho_07distributism.html
"Alternative Perspectives on Economic Growth" by Keith Rankin
http://www.geocities.com/Athens/Academy/1223/krnkn_TOES93.html
The other side believes that the best thing that a corporate leader
can do is to make profits the top priority. Advocates of this
viewpoint argue that putting other values ahead of profits leads to
economic inefficiency that only ends up leaving everyone worse off
rather than better off. Economists such as Milton Friedman come down
on this side.
An article in The Guardian quotes Professor Friedman as declaring: "If
businessmen do have a social responsibility other than making maximum
profits for stockholders, how are they to know what it is?"
From: "Profit motive: Social responsibility is all well and good, but
the business of business is making money, not charity," hosted by The
Guardian:
http://society.guardian.co.uk/givinglist/story/0,10994,579455,00.html
More from the same Guardian article:
"In the case of companies, their job is to maximise profits for their
owners, the shareholders. Appeals for companies to consider the
welfare of other stakeholders - their employees, the local community,
the environment - can only distract from the bottom line. The simplest
illustration of this is a firm which has to sack workers to cut costs.
Putting people before profits is all very well but when it comes to
the crunch, business is about making money, not employing people, and
a bankrupt firm can't afford to hire any workers."
http://society.guardian.co.uk/givinglist/story/0,10994,579455,00.html
Also see:
"The Invisible Hand - 1980" by William H. Peterson, hosted by
Libertyhaven.com:
http://www.libertyhaven.com/theoreticalorphilosophicalissues/earlyclassicalliberalism/invhand.shtml
"Profits Benefit Society" by Alex Singleton, hosted by Liberty Log:
http://www.libertylog.com/cat_freemarket_economy.html#000369
"Profits over people: Critics argue that globalisation hurts workers.
Are they right?" from The Economist, hosted by University of Michigan:
http://www.econ.lsa.umich.edu/~jamesl/g2.html
search strategy: "people over profits", "people instead of profits",
"profits over people", "adam smith", "profit motive"
I hope this helps. |
Clarification of Answer by
juggler-ga
on
11 Dec 2002 11:47 PST
Hello.
Here's my summary of the basic arguments of the "profit is more
important than people" side:
The reason why firms are in business is to make a profit for the
owners. The nature of a free market economy is such that multiple
businesses in the economy are competing. The basic foundation of this
competition is that all firms try to maximize profits by producing
goods and/or services at a low cost and selling those goods and
services at a high price. For a business to be a success (i.e., to
earn profits), the business must provide goods and services to
consumers at prices that the consumers are willing to pay. Economic
inefficiency would be introduced if business leaders were to change
their focus from concentrating on earning profits by producing goods
and services to trying to promote "people."
When critics say that profits shouldn't be more important than people,
what they really mean is that firms should continue to employ workers
they don't need, or produce goods that consumers don't want, or engage
in social policies that are irrelevant to the core function of the
business. Ultimately, any firm that adopted this "people" approach as
its main focus could not continue to compete successfully in the
marketplace. For example, employing unnecessary workers in the name of
helping "people" might be well-intentioned, but it introduces extra
costs to the business. In the short term, those costs might be passed
along to consumers in the form of higher prices. In what way does that
benefit society? In the long-term, more efficient firms with lower
production costs will come in and offer the same goods and services at
lower prices and consumers will buy from them instead of the
"people"-oriented firm. Similar inefficiencies are introduced if the
firms produce goods that consumers don't want or engage in costly
social activities that are unrelated to the core business.
The reality is that "people"-oriented firms will eventually be forced
to either change their focus back to profits or go out of business.
The result of firms going out of business is more unemployment and
less competition. How do unemployment and reduced competition benefit
society? They don't. It may sound cold-hearted, but the basic fact of
business is that the bottom line is the bottom line. From a business
perspective, profits are more than people.
I hope this helps.
|
